Tuesday’s move, formed in a narrow Doji candle, indicates that the recovery leg from 0.6865 (Jun 30 low) is starting to lose momentum, after repeated failure at the initial Fibo barrier at 0.6961 (23.6% retracement at 0.7271/0.6965) supported by a lower 20DMA.
The Stochastic is in the overbought zone and the RSI is heading south (currently at 42) on the daily chart, warning of a possible correction, if the Fibo barrier at 0.6961 continues to limit.
Declines should be contained by a break of the 10DMA (0.6914) to maintain near-term bias with the bulls and the odds of an acceleration towards 0.7000/20 pivot points (psychological/Fibonacci 38.2%) and 0.7068 (50% retracement/100DMA) in the extension.
This idea is supported by the US central bank’s softer tones on monetary policy, especially in light of signs of weakness in the US business sector, after disappointing June non-farm payrolls data that almost completely marginalized expectations of a Fed rate hike this month and shot down bets on a rate hike at the September policy meeting.
On the other hand, the Reserve Bank of Australia maintained its hawkish stance, which contributed to the diverging monetary policy views of the two central banks and supported the Australian dollar.
Conversely, any hawkish shift from the Fed could hurt the near-term structure and risk retest the 200DMA (0.6868), the key medium-term support, which keeps the broader bulls (from April 2025) in play.
Accuracy: 0.6961; 0.7000; 0.7020; 0.7068
sip: 0.6914; 0.6868; 0.6833; 0.6766
